Metrobank raises $500 M from offshore debt market

The Metropolitan Bank & Trust Co. (Metrobank) raised $500 million through the issuance of dollar-denominated senior unsecured notes to optimize the bank’s capital structure amid the COVID-19 pandemic.

Metrobank president Fabian Dee said the country’s second largest bank was very pleased with the outcome of the successful issuance confirming the confidence and strength of Metrobank’s name and track record in the Philippines.

“This bond issuance will further enhance our business strength and optimize our capital structure especially in this current market environment,” Dee said.

Metrobank established a medium term note program worth up to $2 billion or its equivalent in other currencies in March 2017 to fund its expansion program.

The fundraising activity was five times oversubscribed with 120 investors at its peak reflecting the strong confidence investors’ have in Metrobank’s credit.

In terms of distribution, the order book was allocated predominantly to Asia with 81 percent, and the remaining 19 percent to Europe, Middle East and Africa (EMEA).

The dollar-denominated notes fetched a fixed coupon of 2.125 percent payable semiannually, matching the lowest coupon for a Philippine borrower. The issuance of the notes represents the first senior notes of Metrobank in the international capital markets.

Fernand Antonio Tansingco, head of the financial markets sector at Metrobank, said the successful issuance would allow the bank to diversify its funding sources and shore up its financial position in preparation for a bounce back and recovery.

“We are thankful for the strong support from the global investors after our re-entry in 17 years,” Tansingco said.

The net proceeds from the bonds will be used to tap longer-term offshore funding, diversify Metrobank’s funding sources and finance maturing short-term borrowings.

UBS AG Hong Kong branch and First Metro Investment Corp. (FMIC) served as joint global coordinators and joint bookrunners, while Mitsubishi UFJ Financial Group and SMBC Nikko Securities acted as joint lead managers.

Metrobank has also been tapping the onshore debt market, raising a total of P81 billion in six tranches out of its P100-billion bond and commercial paper program launched in November 2018.

Metrobank more than doubled its provisions to P5 billion in the first quarter from P2.4 billion as it expects soured loans to rise amid the COVID-19 pandemic. This translated to a 10.3 percent decline in earnings to P6.1 billion from P6.8 billion.